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This Week in Massachusetts – April 19

Posted on April 19, 2023

Inflation is Cooling, Giving Federal Reserve Breathing Room as a Recession Looms

Boston Globe – Food prices are leveling off, energy costs continue to fall, and used cars are getting cheaper.

After two years of scorching inflation, the government’s Consumer Price Index report for March, released on Wednesday, suggested that more tolerable days may be ahead.

Progress will be slow, and one big expense — housing — is rising at a rate that is anything but hospitable. Yet even here, relief may not be too far off.

And with inflation on the wane, the Federal Reserve may have leeway to cut rates later this year if an anticipated recession hits.

CPI, which measures changes in prices of a large basket of goods and services, rose 5 percent in March, the smallest year-over-year gain since May 2021.

While down from a peak of more than 9 percent last summer, the rate remains much higher than the roughly 2 percent annual increases we were accustomed to in the years before the pandemic, and is more than double the Fed’s target.

Fewest Massachusetts Startups since 2016 got Venture Funding in the First Quarter

Boston Globe – Venture-capital financing activity for startups in Massachusetts in the first quarter fell to the lowest level in seven years, as the collapse of Silicon Valley Bank added another drag on the state’s innovation economy.

Only 162 startups raised backing from VC funds in the quarter, down from 304 deals in the first quarter last year and the least since the third quarter of 2016 when 155 deals closed, according to data from market tracker PitchBook and the National Venture Capital Association. Local startups raised a total of $3.0 billion in the first quarter, down 55 percent from the same period a year ago and the lowest total since the end of 2019.

Several factors combined to make fundraising tough for startups at the beginning of the year. While tech stock prices have recovered somewhat after plunging in 2022, they remained well below the heights of 2021. And investors have shown no interest in new startups going public. Further, higher interest rates have slowed the economy and made risky investments like startups less appealing. Finally, the rapid collapse of Silicon Valley Bank, a major player in the local startup economy, delayed some deal-making in March, venture capitalists said.

The bank’s demise “clearly caused severe strain and distraction in the system, although we believe short term,” Lars Albright, a partner at Unusual Ventures in Boston, said.

As Remote Work Takes Hold, Boston’s Office Market Starts to Wobble

Boston Globe – For more than three years, people have been playing “wait and see” with regards to how the COVID-19 pandemic and remote work policies would impact Boston’s office market.

Now, we’re seeing. And the picture, while not as bad as in some cities, isn’t very pretty.

Office vacancy across Boston, Cambridge, and the suburbs has risen, with the regional vacancy rate hitting 19.1 percent at the start of this year, its highest in nearly two decades, according to real estate firm JLL. Companies such as Verizon, Cengage, and Duck Creek Technologies are putting blocks of underutilized space up for sublease. And even corporate tenants who are looking for new office space are looking for less of it, as hybrid work policies have become routine.

“Generally they’re saying: ‘I don’t need as much space as I have,’” said Matt Daniels, who leads JLL’s New England brokerage team.

Those impacts are rippling through the city’s office market. Just in the first three months of the year, companies in Greater Boston vacated more than 1.5 million square feet of office space — nearly a full Hancock Tower’s worth. And experts forecast more pain is ahead.

Boston REI Workers File for Union Election, Joining the Rising Tide of Retail Organizing

Boston Globe – REI employees in Boston filed for a union election, joining the growing ranks of retail workers organizing at major brands around the country. The Boston store is the sixth in the outdoor equipment chain to push for union recognition in the past year: Workers in New York; Berkeley, Calif.; and Cleveland have held successful votes, and employees in Chicago and Eugene, Ore., recently filed for elections.

As the pandemic recedes and labor shortages continue, emboldened employees are banding together across the country to push for better working conditions, higher pay, and a greater voice in how their workplaces operate. Along with union drives at colleges, museums, and newsrooms, campaigns at well-known companies such as Starbucks, Amazon, Trader Joe’s, Apple, and Chipotle are generating renewed attention to a labor movement some had left for dead. At Starbucks, nearly 300 of the coffee giant’s stores, including about a dozen in Massachusetts, have unionized since late 2021.

The number of petitions for union representation increased 53 percent in fiscal year 2022 from the year before, according to the National Labor Relations Board, and election petitions in the first six months of the current fiscal year have outpaced those filed in the same period last year. Public support for unions, meanwhile, is at the highest level its been since 1965.

Like Starbucks, REI, which has 168 stores nationwide, including five in Massachusetts, bills itself as a progressive company. And, as at Starbucks, REI’s workforce is pushing the company to uphold those values for its workforce, according to organizers at the United Food and Commercial Workers union, which is working with Boston REI employees. UFCW and its affiliate, the Retail, Wholesale, and Department Store Union, represent the roughly 480 REI workers who have organized so far, and are working with other stores but would not identify them.

Health Care

We Want to Know Your Perception of Telehealth

Telehealth Survey – AIM has partnered with Massachusetts Health Quality Partners to launch the Employer Telehealth experience survey to improve patients’ experiences of care. If you are a Massachusetts employer we would like to understand your perceptions of telehealth. Take the survey here:

State Declines to Lower Key Hospital Spending Target

Boston Business Journal – The Health Policy Commission resisted pressure to lower the benchmark amid an industry debate about whether it’s an effective tool to curb rising health-care costs.

Supreme Court Expected to Rule on Abortion Pill Limits

Wall Street Journal – The Supreme Court is expected to issue an order as soon as today that could determine the availability of the widely used abortion pill mifepristone for at least the next several months.

The justices are considering emergency appeals from the Biden administration and Danco Laboratories LLC, the brand-name manufacturer of the pill, to keep the drug on the market during ongoing litigation over its approval more than 20 years ago by the Food and Drug Administration. Antiabortion groups filed a lawsuit in November challenging the original approval and more recent regulations that made the pill, which is used in more than half of abortions, easier to obtain.

Budget and Taxation

Big Employers Land Long-Awaited Win with House Approval of Corporate Tax Change

Boston Globe – Maybe it was the map that made the difference?

Several big Massachusetts employers sent a letter to key lawmakers during last summer’s tax debate on Beacon Hill with a map showing just how many states have adopted what’s known as the “single sales factor” approach to determine corporate taxes. Most of the states — including all but one in the Northeast — were colored blue, meaning they determine a company’s income taxes using its in-state sales alone.

Then there was Massachusetts, left in white, one of a handful of states that use a “three factor” method that sets corporate tax bills based on a mix of in-state property, local employees, and sales.

The argument implied by the map: It’s time for Massachusetts to join the crowd and adopt “single sales” for everyone. Particularly in this era of remote work and relocations, Massachusetts risks being left behind. Taxing a company based on real estate holdings and local employment could incentivize growth elsewhere. Executives who signed the June 28 letter came from BNY Mellon, Citizens Bank, Dunkin’, Santander, State Street, TJX, and Tripadvisor.

Digital Nomads and Mobile Workers Face Major State Tax Challenges

Multistate – Many government relations professionals travel regularly for work — lobbying in statehouses, attending conferences, or visiting colleagues to collaborate in person.

But few people realize that when you cross state lines for work, it can have major tax implications for both the employee and the employer. For example, if you attend a one-day conference in Boston, your employer is on the hook to withhold income taxes for Massachusetts, even though you’re not a Massachusetts resident. If you visit New York for a single day for work, you are required to file a New York tax return. It’s a compliance nightmare both for traveling employees and their employers, who are required to track employees’ locations and withhold income taxes according to a patchwork of state laws.

This issue has evolved from a niche tax challenge to one with wide-ranging impacts for workers and the business community at large. As businesses across the country adapt their post-pandemic operations, many companies are choosing to move to hybrid or fully remote models, allowing employees to work in a location of their choice and travel to the office only periodically. Recent data suggest that the average office occupancy rate is barely 50%. Many workers are embracing this newly flexible environment by traveling across state borders while working remotely.

Businesses that employ hybrid or remote workers often require employees to visit an office outside their state of residence periodically. These employers have a strong incentive to support laws that reduce the tax administrative burden for their mobile and temporary workers.

In addition to those remote or hybrid workers who must travel periodically to headquarters, what about employees who cover sales regions and must travel to several states to visit factories or other facilities? Or professions who require routine travel to conferences and events across the country?

All of these activities likely trigger personal income tax liability in states in which the employee does not live, even though they are only in that state for a few short days. And this patchwork of laws is a significant compliance burden for employers, especially for small and medium-sized businesses that don’t have robust tax or HR departments.

House, Healey Set Different Priorities for Millionaire Tax Money

Boston Herald – The House budget sets different spending priorities than Gov. Maura Healey for the $1 billion expected to come in from the millionaire tax.

The tax, approved by voters in November, placed a 4 percent income tax surcharge on income over $1 million, with the new revenue targeted at education and transportation initiatives.

Healey proposed spending $510 million on education and $490 million on transportation, while the House Ways and Means Committee is recommending an even split between the two categories.

There is some overlap between the two proposals. Both provide $20 million for a free community college program proposed by Healey and $5 million to lay the groundwork for mean-tested fares at the MBTA. There is also overlap on highway and bridge spending and support for regional transportation agencies. In all, the two proposals share $475 million in spending priorities, according to the Massachusetts Taxpayers Foundation.

But there are also significant differences. The House Ways and Means Committee, for example, proposes spending $161 million of the millionaire tax money to provide free meals to every student attending a public school in Massachusetts.

House Ways and Means Chair Aaron Michlewitz said the school meals funding and the language included in the budget would make Massachusetts the fifth state to make the pandemic-era program permanent and save households roughly $1,200 per child.

Healey included no money for school meals in her budget and instead included an amount similar to the House in a supplemental budget proposal, presumably because she doesn’t view the meals initiative as permanent.

What’s in the House Budget? Here’s How Lawmakers Would Spend $56 Billion

Boston Heald – The House offered its version of a state spending plan. Here is some of what lawmakers are suggesting for $56.2 billion in spending:


The bill would spend a full $19.8 billion funding MassHealth programs, which includes a plan to cover hundreds of thousands of Bay State residents who may find themselves ineligible for federal healthcare subsidies following the end of COVID era eligibility rules.


About $4.1 billion would go into the state’s pension fund, with another nearly $3 billion split between the MBTA and the state’s School Building Authority, and about $500 million added to the Rainy Day Fund bringing it to a record over $9 billion.

Millionaire’s tax

The House, much like Gov. Maura Healey, predicts the state’s new Fair Share Amendment will generate about $1 billion. Half of that would go to education and the other toward transportation initiatives. A sizable portion, more than half according to either the governor’s of the house plan, would be offset by tax cuts.

From what is left, $161 million will cover the cost of school lunches, $250 million will pay for MBTA capital investments and $100 million spent on both bridge preservations and “green” school improvements.

Jail calls

The plan also calls for spending $20 million to cover the costs of phone calls made by and to people in state custody and another $20 million paying for residents over 25 to return to college.

Lottery online

The proposal would allow the Massachusetts lottery to begin online sales, generating an estimated $200 million in revenue that will be put into the Commonwealth Cares for Children program, in addition to another $250 million from the general fund and $40 million from the Fair Share Amendment.

What You Need to Know about the House Budget

Commonwealth Magazine

How big is the House budget?

It comes in at nearly $56.2 billion. The budget is about $170 million higher than Gov. Maura Healey’s proposal because the governor wants to give more money back in the form of tax relief while the House would phase in many of its tax breaks over time, allowing the branch to spend more money now.

That spending total seems like a lot of money.

It is a lot. For perspective, the state budget in fiscal 2016 was $38.4 billion. Over the last eight years, the state budget has grown by $17.8 billion, or 46 percent.

What’s going on with the state’s stabilization fund?

The “rainy day” fund is getting big, reaching record highs over the past few years. As of March 14, it was $7.1 billion. It is expected to grow to $8.5 billion this fiscal year and reach $9 billion next year, which begins July 1.

Does the House propose any new policy directions?

The House is trotting out a proposal that failed to pass last year – giving the Massachusetts Lottery the power to sell its tickets and games online. House officials say online lottery gambling would bring in $200 million, which would funnel into a grant fund for early education and care programs. House budget chief Aaron Michlewitz said the shift online is needed to put the Lottery on equal footing with sports betting operators.

Does the House budget do anything to address problems at the MBTA? 

The budget proposes using $330 million of money from the millionaire tax to support the T. It also proposes expanding the MBTA board from seven to nine members, adding spots for an appointee of Boston Mayor Michelle Wu and a sixth appointee of Gov. Maura Healey who would come from a municipality in the MBTA service area.

MBTA’s Proposes to Spend $9.2 billion on Capital Investments

Boston Globe – Over the next five years, under its recently proposed Capital Investment Plan, the MBTA wants to inject $9.2 billion into its transit system, spending money on hundreds of projects and devoting more than 80 percent of the funding toward what the T calls “safety and reliability.”

But local transportation advocates argue that while the T is right to focus on safety, the agency is not pouring nearly enough resources into expanding the transit system and addressing anticipated future needs. And, they said, with a new administration in place, the transit agency should be aggressive in addressing long-term needs for its subway, train, and bus lines.

“This is a reflection of the same old T that we’ve had in the past,” said Jim Aloisi, a former transportation secretary. “I believe, sincerely, that this governor and this lieutenant governor have a different vision. It’s just not reflected here.”

The proposal features more than 500 projects, including $427 million for a Green Line vehicle replacement program, $411 million on a new fare collection system, and $401 million for a modernization project at the T’s Quincy bus facility. Of those three, the fare collection system and the bus facility are behind schedule and over budget.

For its safety and repair work, the Massachusetts Bay Transportation Authority has said those efforts are “non-negotiable,” according to a presentation last month. That work includes a long-sought safety system to prevent collisions on the Green Line — also long delayed — Commuter Rail crossing improvements, and additional money for inspections, repairs, and upgrades to the system’s stations and other infrastructure.

Last year, the Federal Transit Administration ordered the T to address widespread safety issues after one of its Red Line cars dragged a man to death in April.


Electric School Buses Serve as Mini Power Plants during the Summer

WBUR – Summertime in New England is when people demand the most electricity from the grid because of air conditioner use. At those high-demand times, utilities turn to so-called peaker plants to supply the extra power. They’re often older, more polluting facilities, and they are expensive to run.

But a project in Beverly offers an alternative on-demand power source: the school district uses their electric school buses’ giant batteries as mini power plants to send energy back to the grid.

Beverly Public Schools is one of the first in the country to use its electric buses for more than transportation. The project uses bidirectional chargers that can both charge the bus battery and also allow the battery to send energy back to the grid.

The front panel of an electric school bus charger shows the direction of charge, as well as power and battery level. (Robin Lubbock/WBUR)

The program in Beverly started in the summer of 2021 with one bus. Last summer, it increased to two buses and it sold seven megawatt hours back to the grid —  the equivalent to powering over two hundred homes for an entire day. This summer, the school district expects to use three out of their four electric buses to provide backup power.

Electric buses are ideal backup power plants for two reasons. First, they carry a big battery – a lithium ion battery with three times as much capacity as an electric car. Second, the school buses usually don’t have a “summer job.”

“It’s perfect because in the summer when they’d traditionally be sitting around literally doing nothing, now they can be called on to discharge to the grid,” said Sean Leach is director of technology at Highland Electric Fleets, the company working with Beverly Public Schools.

Stiff EPA Emission Limits to Boost EV Sales

Daily Hampshire Gazette – The Biden administration is proposing strict new automobile pollution limits that would require up to two-thirds of new vehicles sold in the U.S. to be electric by 2032, a nearly tenfold increase over current electric vehicle sales.

The proposed regulation, announced Wednesday by the Environmental Protection Agency, would set tailpipe emissions limits for the 2027 through 2032 model years that are the strictest ever imposed — and call for far more new EV sales than the auto industry agreed to less than two years ago.

If finalized next year as expected, the plan would represent the strongest push yet toward a once almost unthinkable shift from gasoline-powered cars and trucks to battery-powered vehicles.

The plan serves President Joe Biden’s ambitious goal to cut America’s planet-warming greenhouse gas emissions in half by 2030.

The proposed tailpipe pollution limits don’t require a specific number of electric vehicles to be sold every year but instead mandate limits on greenhouse gas emissions. Depending on how automakers comply, the EPA projects that at least 60% of new passenger vehicles sold in the U.S. would be electric by 2030 and up to 67% by 2032.

For slightly larger, medium-duty trucks, the EPA projects 46% of new vehicle sales will be EVs in 2032.


UMass Gets $15 Million Grant to Study Next Generation of Smarter Roads

MassLive – Nearly 43,000 people died in traffic crashes in 2021, a 10.5% increase from the 38,000 fatalities in 2020 — the highest in more than a decade.

Of those deaths, more than 400 were in Massachusetts, representing a 22% jump from 2020.

The federal government believes all those deaths were preventable and now the University of Massachusetts Amherst has a $15 million grant from the U.S. Department of Transportation to do just that: prevent future deaths on the road.

“A lot of the work we do is built around reversing that curve,” said Michael A. Knodler Jr. director of the UMass Transportation Center in the department of Civil and Environmental Engineering. “Which projects are going to have the greatest return on investment?”

With the five-year grant that the university announced Wednesday, UMass Amherst will lead a consortium of universities and colleges from around New England to study road safety. Its goal is to advance transportation research, technology and safety focusing on developing “smart” connected roadways.

House Lawmakers Propose Making Free School Lunch in Massachusetts Permanent

CBS News – Free school lunches in Massachusetts are one step closer to becoming a permanent change.

Lawmakers on Beacon Hill proposed their $56.2 billion budget to get the state through the 2024 fiscal year. Part of that proposal includes plans on how to spend the estimated $1 billion in surtax.

House lawmakers, including House Ways and Means Chair Aaron Michlewitz, told reporters their proposal would look to make permanent the program that provides free school lunches statewide. It first became a reality in the pandemic when federal emergency funding granted it to all 50 states. Last year, Massachusetts lawmakers extended the program that is set to expire at the end of the fiscal year.

“It is absolutely critical,” said Jennifer Lemmerman, who works with the anti-hunger organization Project Bread. “This program has been an enormous success in Massachusetts. What we have seen is that there has been enormous participation.”

Lemmerman said between October of 2019 to 2022, an additional 80,000 students in Massachusetts started eating school meals. “We know that if this were to go away at the end of this school year, those 80,000 more kids, likely with the return of cost or stigma, would not have this resource available to them,” said Lemmerman.